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Market Commentary 06/12/17

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EUR/USD – Falling Out Of Sell Zone

Yesterday’s move higher continued last night with the market pushing deeper into the sell zone that had been spiked when yesterday’s market commentary was published. The market is now falling out of this sell zone but I think the drop is just a retracement not a full-blown reversal.

I’m not sure where this retracement will come to an end but I think it will stop somewhere near the support area I’ve marked above. This support area is based on a support level that runs through the highs that were broken by the move higher. I thought it would be better to mark it as an area than it would to mark it as a single line due to the fact it makes it a little bit easier to see where you should be looking for an entry long.

Tonight and tomorrow I would watch for an entry long somewhere in the support area marked on the image. The area isn’t exact so you could see the market spike through it or turn before it actually gets reached so just be aware of that when looking for your entry long.

USD/JPY – Retracing After Hitting Demand Zone

When my last market commentary was published we had just seen USD/JPY start to reverse after failing to break through the high made last week. Today the market has retraced somewhat but has now started to fall again towards the demand zone that formed as a result of the market moving higher at yesterday’s open.

The reversal has created a supply zone which I suggest you watch for entries short if the market turns and begins moving higher. The small retracement the market has been in for most of today was caused by the demand zone that formed when the market opened on Sunday evening. If this retracement comes to an end and the market drops again, keep an eye out for entries long in the bottom demand zone as it’s likely the demand zone the market has been reacting to today will get broken by the move down.

AUD/USD – Reversal Out Of Sell Zone

Today we have seen AUD/USD reverse out of the sell zone it was entering yesterday evening. The reversal almost pushed the market down into the demand zone that formed due to the move up into the sell zone.

The move into the sell zone was so strong that it almost caused the market to spike through the high of the zone. It was possible to get an entry short into the move out of the sell zone by trading the bearish engulfing candle which formed on both the 5 minute chart and 15 minute chart. The fact the engulfing candle was much much bigger than the surrounding candles made it a high probability short entry. Usually if the engulf is only small when compared to the candle it engulfs it probably won’t cause the market to reverse, but when it’s really big and the previous candle is small it has a high chance of causing a reversal.

Looking at the market now it’s difficult to say which direction it’s going to move in. I think if we see it continue to move up from its current position it’s likely we may see the sell zone broken, but that doesn’t mean you shouldn’t look for signs of the market reversing when it reaches the sell zone because there’s still a chance it could cause the market to reverse. If the market doesn’t move up and instead continues to fall, watch for some kind of move higher to begin when it reaches the orange demand zone seen in the image.

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